Noble Midstream, Salt Creek Midstream enter into JV for crude oil pipeline
Noble Midstream Partners LP has entered into a letter of intent with Salt Creek Midstream LLC to form a 50/50 joint venture on a 200 thousand barrel of oil per day crude oil pipeline and gathering system in the Delaware Basin.
The joint venture will be underpinned by acreage contributions from Noble Midstream and Salt Creek of approximately 180,000 dedicated acres from Noble Energy Inc. and five other SouthernDelaware Basin producers, with a line of sight to additional dedications totalling approximately 100,000 acres.
The 95-mile, 20-inch diameter pipeline system will originate in Pecos County, Texas, with additional connections in Reeves County and Wink County, Texas. The project footprint will be served by a combination of in-field crude gathering lines and a trunkline to Wink Hub. The partnership anticipates the execution of definitive agreements and closing of the transaction to occur in the fourth quarter of 2018. First flow is expected to commence in October 2018.
Salt Creek has commenced construction of the pipeline, with an expected operational date in the second quarter of 2019. The project provides access to 200,000 barrels of new crude oil storage, with expansion potential to 300,000 barrels. The five-year net capital investment for Noble Midstream is anticipated to total approximately $60 to $80m. The investment is supported by an average customer acreage dedication term of approximately 15 years.
Noble Midstream commenced gathering on an initial well for a third-party Delaware Basin producer in September. The customer development plan spans across approximately 13,000 dedicated acres in Reeves County, with additional activity on the acreage anticipated in 2019. Oil, gas, and produced water gathering services are being provided through the Blanco River development company.
Noble Midstream will continue to provide oil gathering services for Noble Energy’s Permian development in the Blanco River DevCo and the northern Reeves County acreage position remains dedicated to the Advantage Pipeline system for in-basin oil transportation through the Trinity River DevCo.
“We are excited to partner with Salt Creek on the formation of this joint venture and look forward to bringing both our commercial and operations expertise to the table,” stated Terry Gerhart, Chief Executive Officer of Noble Midstream. “The pipeline system will provide critical downstream connectivity and enhanced market optionality for producers in the Southern Delaware Basin.”
Salt Creek CEO Zach Lee added: “We are excited to be working in partnership with the Noble Midstream team in the Southern Reeves area. We have known and respected the Noble Midstream team for some time and look forward to building a world class crude oil business with them as a partner in the Delaware Basin.”
For more information visit: www.nblmidstream.com
8th October 2018